A Two-Member Bench of the Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) observed that residential complex is built for self-use and remains outside service tax net.
The issue raised in the appeal relates to demand of service tax on residential houses made for their clients namely Classic Marble Company Private Limited. The demand has also been confirmed on the ground that the activity of construction of road is a composite contract for not only for construction of road but also for residential premises.
Another argument raised in the impugned order relates to the composite nature of the contract of construction of residential premises and roads.
The counsel for the appellant relied on various judgments to assert that residential complexes made for own use or for housing the employees are outside the taxable net.
In the case of Nithesh Estate Limited it was observed that “It is quite clear that C.B.E.&C. also has clarified that in cases like this, service tax need not be paid by the builder/developer who has constructed the complex. If the builder/developer constructs the complex himself, there would be no liability of service tax at all. Further in this case it was different totally, the appellant, has engaged sub-contractors and therefore rightly all the sub-contractors have paid the service tax. In such a situation in our opinion, there is no liability on the appellant to pay the service tax.”
The Bench of Ramesh Nair, ( Judicial Member ) and Raju, ( Technical Member ) observed that “In light of above, it is apparent that when the residential complex is built for self-use then it remains outside the service tax net. In light of above decisions, the demand on the construction of road and residential premises cannot be sustained and the same is set aside.”
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